Lithium is a key component in a range of innovative industries due to its high-energy storage, insulating and heat resistant capabilities.
Lithium is a soft silvery-white metal which is highly reactive and does not occur in nature in its elemental form. In nature, it occurs as compounds within hard rock deposits (such as Cinovec) and salt brines.
Lithium and its chemical compounds have a wide range of industrial applications resulting in numerous chemical and technical uses. Lithium has the highest electrochemical potential of all metals, a key property in its role in lithium-ion batteries.
Rechargeable lithium-ion batteries typically weigh approximately 75% less than an equivalent lead acid battery, making them an ideal solution for high-performance products, including electric cars, bikes and wheelchairs.
Lithium Carbonate Market
According to Deutsche Bank, global lithium demand increased 15% year on year to 212kt lithium carbonate equivalent (LCE) in 2016, slightly ahead of estimates. Deutsche forecast lithium pricing to remain elevated relative to historical averages, but retrace 15% over 2016 pricing levels. Further, the medium-term outlook is improving and Deutsche have recently lifted their 2019 demand forecast to 380kt.
Additionally, SignumBOX forecasts that global demand will reach 400,000tpa of LCE by 2025 (2013: 186,000 tonnes of LCE), circa 250,000tpa, which are forecast to be required by the lithium-ion battery market as players in the electric car industry set strong targets focused on increasing the market penetration of their products. Tesla is aiming to build 500,000 vehicles per year by 2020 and China has set ambitious targets for domestic Electric Vehicle (EV) development and deployment, aiming to have 5 million EVs on the road by 2020. Current forecasts predict the global market for Lithium-ion batteries in passenger vehicles will grow from $3.2 billion in 2013 to $24.1 billion in 2023.
Lithium Carbonate Price Forecast
Deutsche Bank consider that the main battery grade lithium carbonate price will stabilize around the $10,000/tonne (USD) mark for the immediate future.
Benchmark expects the average forecasted price range for lithium carbonate 99.95%
to be $9,500 to $13,000/tonne (USD) between 2017 and 2020.
Influence of Electric Vehicle market on lithium carbonate prices.
The ramp up of new EV model sales from major auto companies is generally considered to be a key driver of lithium demand in the short to medium term. Other factors include the increased production from battery manufacturing facilities and the continued inventory build within the supply chain.
The Cinovec Project is located centrally and within close proximity to a number of major European car manufacturers.
There are also numerous Lithium-ion battery manufacturers who have begun building Giga-factories within close proximity to the Cinovec project.
Apart from a small Iberian production for local ceramics/glass use, the European Union currently has no internal lithium supply. As such, they are a major importer of lithium, historically consuming 24% of the global market (second only to China).